Summer Analyst Job Description
What is a Summer Analyst Job?
A summer analyst, summer intern, or SA, is someone undertaking an internship within an investment bank, usually for 3 months over the summer during their sophomore or junior year.
The program is usually set up in 3 main sections;
- Real work experience
A summer analyst typically does work similar to that of a full-time analyst, although with a lot more 'grunt' work. This includes work such as:
- Fetching coffee
- Ordering food
- Data entry
- Moving documents between departments
- Digitizing paperwork
However, some of the more technical "real" work they are often tasked with includes:
- Analyze financial statements and operating information to reveal insights about companies
- Build financial models, such as a Discounted Cash Flow (DCF) model, to value companies and investments, and showcase projected financial results
- Participate in merger & acquisition (M&A) models, including accretion dilution models
- Build a trading comparables analysis and spread precedent transactions to help with valuations
The main way for graduates to get a full-time position in an investment bank is through having completed an internship as a summer analyst with the bank. Most bulge bracket banks extend 60-90% of their junior interns full-time offers at the end of the Summer to return when they have completed their degree at university. For detailed data on Summer Analyst and Summer Associate internship offer statistics by firm, go to WSO's detailed investment banking company review report.
Check out this podcast posted by WallStreetOasis where a member, @yekino, shares his story of how he broke into an investment banking summer analyst position and how it was like as an intern.
Summer Analyst IB Salary and Bonuses
During their internship, Summer Analysts typically have to work the same hours as full-time first-year analysts (80-100 hours a week) and are paid the same amount on a pro-rata basis (~$77,000 per year on average) with an average bonus of $6,000.
The total average compensation for Summer Interns in Bulge Bracket (BB) investment banks is a salary of $78,000, and a bonus of $5,000. However, the total average compensation for Summer Analysts in Middle Market (MM) investment banks is a salary of $77,000 and a bonus of $7,000.
For up to date salary data for summer interns at investment banks, please visit the compensation section of WSO's Investment Banking Industry Report Below is a list of links to popular summer analyst programs at Bulge Bracket Investment Banks:
- Goldman Sachs (GS)
- J.P. Morgan Chase (JPM)
- Credit Suisse (CS)
- Morgan Stanley (MS)
- Bank of America Securities (BofA)
Below is a list of links to popular summer analyst programs at elite boutique investment banks:
- PJT Partners (PJT)
- Perella Weinberg (PW)
- Houlihan Lokey (HL)
Below is a list of links to popular summer analyst programs at middle market investment banks:
Investment Banking Summer Intern Hours
Summer Analysts are known to put in a lot of hours, but exactly how many hours do they work? Hours differ between investment banks, and even differ a lot within the same banks based on the amount of work that is delegated to them and the current period they are in, as some weeks might be busier than others. The hours interns are expected to put in ranges from 70 hours a week to even as high as 100, with an average of 80 hours a week.
Check out this short video extracted from a podcast posted by WallStreetOasis where a member, Benioff the Third, discusses how many hours he was expected to work as a Summer Analyst for an investment bank:
A Day in the Life of an Investment Banking Intern
The life of a summer analyst is not an easy one, and below will showcase what life is like as an IB intern. However, the workload of summer analysts may vary depending on the current work-week, as well as location, as cities like New York City (NYC) are known to be a lot busier with more work to be done.
7:30AM: Wake up to the beeping of my alarm clock, brush my teeth, take a quick shower, have some eggs on toast, and on my way out to catch the next train to work.
8:30AM: Arrive at the office; have a cup of coffee, reply to some emails, and conduct some research using Bloomberg and Capital IQ for my upcoming presentation.
10AM: Attend meetings for live deals with other analysts and senior bankers, where I am expected to write notes for the meeting debrief.
11AM: after giving my work to an analyst to review, he suggests some changes to the report I made, and the managing director (MD) calls me in for a meeting to discuss the research I conducted.
12:15PM: A few friends and I go down to the cafeteria to get some lunch and eat it at our desks while continuing to get some work done on numerous different projects.
1:30PM: Continue to make changes and fix errors on my presentations according to the analysts, associates, and vice-president's suggestions.
3:30PM: Attend a client meeting with the other associates and analysts to check up with the client, quickly looking over the presentation to ensure everything is accurate. I mostly just take notes at this meeting.
4:30PM: Me and a few of the other summer analysts have a quick coffee break in the office to decompress.
5PM: Complete some harder work that takes a bit longer to complete, such as creating financial models, familiarizing myself with different excel models for different projects, and creating a financial buyers list of buyers that are interested in investing in the client's industry.
7:30PM: Stroll down to the food court and get some dinner. I usually treat myself to some seafood, eating it at my desk and attempting to finish improving my presentation projects, implementing all the edits and suggestions that the higher-ups (which in the case of an IB intern, is literally everyone) sent down to me.
10:30PM: Ask the rest of the team who are still in the office (which is usually just interns, analysts, and associates) if they need any help with any projects they are working on. An associate requires my assistance in creating an accretion/dilution model for a Merger & Acquisition (M&A) deal he is working on.
1AM: Email the work I have completed back to the associates, and finally call it a day. I leave the office, call a cab, and get home tired and sore from a long day's work. I take a quick shower, and head to bed to get ready for another day in the life of an investment banking intern.
Check out this youtube video posted by Kenji Farre which showcases a clear and detailed timeline of a day in the life of an investment banking summer analyst:
Summer Analyst Interview Questions
Interviewers for Summer Analyst positions ask a multitude of behavioural and technical questions, and it is crucial that you as an interviewee stand out and leave a strong impression, displaying intelligence, confidence, and certainty in your future career path as an investment banking analyst.
Here is a collection of common questions asked in investment banking intern interviews. You can also get access to over 6,977 IB intern interview questions in WSO's Company Database,
Technical IB Interview Questions
1. What are the three main financial statements?
Sample Answer: The three main financial statements are the
The income statement shows a company's revenues, costs, and expenses, which together yield net income.
The Balance Sheet (BS) shows a company's assets, and how those assets were financed through liabilities and equity.
The Cash Flow Statement (or the statement of Cash Flows) starts with net income from the Income Statement; then it shows adjustments for non-cash expenses, non-expense purchases such as capital expenditures, changes in working capital, or debt repayment and issuance to calculate the company's ending cash balance. Overall, it shows the cash flow from operating, investing, and financing activities to calculate how much cash on hand the company currently has.
2. If you could use only one financial statement to evaluate the financial state of a company, which would you use?
Sample Answer: I would want to use the Cash Flow Statement so I could see the actual liquidity position of the business and how much cash it is using and generating. The Income Statement can be misleading due to any number of non-cash expenses that may not truly be affecting the overall business. Additionally, the Balance Sheet alone just shows a snapshot of the company at one point in time, without showing how operations are actually performing.
3. What is WACC and how do you calculate it?
Sample Answer: WACC, or Weighted Average Cost of Capital, is used as the discount rate in a discounted cash flow (DCF) analysis to calculate the present value of a company's cash flows and terminal value. It reflects the overall cost of a company raising new capital, which is also a representation of the riskiness of investment in the company. The formula for WACC is as shown below:
4. Why would a company issue equity rather than debt to fund its operations?
Sampler Answer: The reasons why a company would issue equity rather than debt is
- If the company feels its stock price is inflated, it can raise a large amount of capital compared to the percentage of ownership sold
- If the projects the company plans to invest in with proceeds may not produce immediate or consistent cash flows to pay off the principal and interest debt repayments
- If the business wants to adjust its capital structure or pay down their existing debt
- If the owners of the company want to sell off a portion of their ownership
5. Why would a company issue debt rather than equity to fund its operations?
Sample Answer: The reasons why a company would issue debt rather than equity is because
- It provides the benefit of tax shields, which reduce the taxes owed by the company, as interest repayments are tax-deductible
- It maximizes return on invested capital by having a higher financial leverage
- It does not dilute ownership interest in the company
- Issuing debt yields a lower WACC than issuing equity
6. How/Why do you lever or unlever beta?
Sample Answer: Unlevering beta allows one to remove the debt effect in the capital structure. This will show you the risk of a firm's equity compared to the market. Also, if you are trying to do a market comparison with a company that is not on the market (so no beta), you can take a comparable company and unlever its' beta as a proxy for the unlisted company's beta.
7. What are some methods you can use to value a company?
Sample Answer: The three main methods you can use to value a company are
- Comparable Analysis
This is when the analyst will take the average multiple from comparable companies (based on size, industry, etc) and use that multiple with the operating metric of the company being valued.
- Market Valuation / Market Capitalization
Market Capitalization (also known as the Market Value of Equity) is used only for publicly traded companies. It is calculated by multiplying the number of shares outstanding by the current stock price.
- Discounted Cash Flow (DCF) Analysis
A DCF analysis is a valuation method that estimated the value of an investment, such as an asset or company, based on its forecasted cash flows, and then discounting them to find a present value of that cash.
Behavioural IB Interview Questions
1. Why Investment Banking?
2. Why would you be successful in investment banking?
3. What would make you a successful summer analyst?
4. Why this company?
5. What do you do in your free time?
Check out this video posted by WallStreetOasis on Youtube that covers how to prepare for an Investment Banking interview, with behavioural and technical questions as well as sample answers:
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